In 20, oecd and g20 countries, working together on an equal footing, adopted a 15point action plan to address beps. Beyond securing revenues by realigning taxation with economic activities and value creation, the oecdg20 beps project aims to create a single set of consensusbased international tax rules to address beps, and. The spread of the digital economy poses challenges for international taxation. Oecd ilibrary addressing the tax challenges of the. The oecd g20 base erosion and profit shifting project or beps project is an oecdg20 project to set up an international framework to combat tax avoidance by multinational enterprises mnes using base erosion and profit shifting tools. Oecd beps action plan status update report june dd 3 882017 3. The report expands the final base erosion and profit shifting beps action 2 paper, neutralising the effects of hybri d. Action 1 of the beps action plan calls for work to address the tax challenges of the digital economy. The pkf international tax network commits to update this report on a 6 monthly basis for your convenience, please find a summary of the 15 action points discussed by the oecd beps action plan report below. Action 1 of the base erosion and profit shifting beps action plan deals with the tax challenges of the digital economy.
Our first issue is related to action 1 of the beps action plan which calls for work to address the tax challenges of the digital economy. Oecd, uk and eu 2 practical implications and issues to consider. Action 1 of the base erosion and profit shifting beps action plan deals with the tax. The oecd issued a final report on action 1 in 2015 and a subsequent report in 2018, yet has failed to recommend a solution to address the physical presence issue. Oecdg20 base erosion and profit shifting addressing the tax. The instrument is called multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting and entered into force on 1 july 2018. The action plan identified 15 actions along three key pillars.
Action 1 addressing the tax challenges of the digital economy. Final beps package for reform of the international tax system to tackle tax. This progress report is an update to the 2015 beps action 5 report and the 2017. The oecd report on beps action point 7 suggests amendments to the definition of a pe used in dtts. Further, the report also states that contracts mentioned in article. The digitalization of the economy is considered as a key driver of innovation, economic growth and societal change, and is a major challenge for the international tax system. Oecd beps action 7 preventing the artificial avoidance of. The oecd committee on fiscal affairs cfa, bringing together 44 countries on an equal footing all oecd members, oecd accession countries, and g20 countries, has adopted a final set of deliverables described in the action plan. Addressing base erosion and profit shifting beps is a key priority of governments.
Understanding the oecd tax plan to address base erosion. Administration addressing the tax challenges of the digital economy, action 1 2015 final report en. Oecd issues final report on the tax challenges of the. Addressing the tax challenges of the digital economy, action. Beps action has been implemented by the program law of july 1, 2016 and published in the belgian official gazette of july 4, 2016.
Its final package of reports released in october 2015. Beps implementation tracker action 1 addressing the tax challenges of the digital economy. Be grounded in the concept of value creation during and since the beps project, international tax policy has sought to align taxing rights with the location of value creating activities undertaken by enterprises. The introduction of the ppt to address perceived treaty abuse, the final report on beps action 65 recommends that a principal purpose test be added to tax treaties. Luxembourg signatory to the mli amending tax treaties in line with beps recommendation. Oecd, uk and eu 2 practical implications and issues to consider 3 our endtoend approach to cbc reporting 4 wrap up and questions. Beps actions implementation by country action 1 digital.
Addressing base erosion and profit shifting is a key priority of governments around the globe. It assesses implementation for the 1 january 2017 31 december 2017 period. To implement the beps project, with its objective of greater tax integrity, the oecd identiied 15 actions. This action assesses possible answers to the challenges raised by the digital economy. With the release of the oecds beps final report, its an appropriate time to consider how the beps project has affected the role of the oecd as a standardsetter in international tax and how that role is likely to evolve in the future. The digital economy is the result of a transformative process brought by information and communication technology ict, which has made technologies cheaper, more powerful, and widely standardised, improving. This report sets out an analysis of these tax challenges. The project, led by the oecds committee on fiscal affairs, began in 20 with oecd and g20 countries, in a context of financial crisis and tax affairs e. The final report on action 3 will be addressed in webcasts on. On 21 october 2016 the irs issued final regulations under section 385 addressing interest deductions. The legislation to introduce changes in the tax law further to beps action 2 hybrids, 3 controlled foreign corporations, 4 interest deductions, 7 permanent establishment and. This site is powered by keepeek 360, logiciel phototheque for business.
The output under each of the beps actions is intended to form a. In its action plan, the oecd calls for fundamental changes to the current mechanisms and. Petersburg1 endorsed the base erosion and profit shifting beps action plan. The task force on the digital economy tfde, a subsidiary body of the committee on fiscal af. These amendments are intended to address avoidance strategies used to circumvent the existing definition and artificially shift profits out of the country in which sales take place. Address the tax challenges of the digital economy on 16 september 2014, ahead of the g20 finance ministers meeting on 2021 september, the oecd published seven papers as a first tranche of deliverables under the base erosion and profit shifting beps project. At the behest of the g20, the oecd also developed a comprehensive.
It notes that because the digital economy is increasingly becoming the economy itself, it would not be feasible to ringfence the digital economy from the rest of the economy for tax purposes. Political leaders, media outlets, and civil society around the world have expressed growing concern about tax planning by multinational enterprises mnes that makes use of gaps in the interac. The final report on action recommends that 1 the first cbc reports should be with respect to tax years beginning after january 1, 2016, and 2 the first reports should be filed one year after the end of the tax year with respect to which the report relates. Administrationaddressing the tax challenges of the digital economy, action 1 2015 final report en. Addressing the tax challenges of the digital economy en fr. Action 6 in the beps action plan had identified treaty abuse, and in particular treaty shopping, as an important source of beps concern. Based on several intermediary reports, the oecdg20 inclusive rameworkf on beps issued a work.
Oecdg20 base erosion and profit shifting projectview more titles read online download pdf buy this book get citation details. The four minimum standards are highlighted s ee actions 5, 6, and 14 below. Jan 29, 2016 following the release of the report addressing base erosion and profit shifting in february 20, oecd and g20 countries adopted a 15point action plan to address beps in september 20. Economy report or final report, largely follows the initial action 1 deliverable on the.
Since vat is the conceptually more appropriate tax on digital transactions, preference to a vat over a withholding tax. Oecd releases final report on cfc rules under beps action 3. Addressing the tax challenges of the digital economy, action 1 2015 final report. This publication is the final report for action 11. The document, addressing the tax challenges of the digital economy the digital economy report or final report, largely follows the initial action 1 deliverable on the. Beps actions implementation by country action 1 digital services on 5 october 2015, the g20oecd published final reports and an explanatory statement outlining consensus actions under the base erosion and profit shifting beps project. The report recommends domestic law changes to neutralise the effect of certain payments or deemed payments involving branches. Oecd ilibrary addressing the tax challenges of the digital. The 15 beps final reports reports were adopted for each beps action. The document, addressing the tax challenges of the digital economy the digital economy report or final report, acknowledges that special rules designed exclusively for the digital economy. Oecd issues final report on the tax challenges of the digital ey. In 20, oecd and g20 countries, working together on an equal footing, adopted a. Oecd ilibrary oecdg20 base erosion and profit shifting project. Read all the oecd reports related to the base erosion and profit shifting.
Appendix 1 beps action points 2 argentina colombia indonesia malta portugal switzerland austria cyprus ireland mauritius romania turkey belgium denmark italy mexico russia uk. Following the release of the report addressing base erosion and profit shifting in february 20, oecd and g20 countries adopted a 15point action plan to address beps in september 20. Pe definition in final cbcr regulations is intended tobe consistent with. The proposed article would generally provide that a treaty benefit shall not be granted if it is reasonable to conclude that obtaining that benefit was one. Oecdg20 base erosion and profit shifting addressing the. Canada takes first beps steps by nathan boidman and michael n. Oecd countries, was established in september 20 to develop a report. Measuring and monitoring beps, action 11 2015 final report. Action 1 of the beps action plan specifically analyses the phenomenon of digitalisation from a tax perspective.
Addressing the tax challenges of the digital economy, action 1. The report expands the final base erosion and profit shifting beps action 2 paper, neutralising the effects of hybri d mismatch arrangements, issued on 5 october 2015. The final report on action 1, addressing the tax challenges of the digital economy, largely follows the initial action 1 deliverable on the digital economy released by the oecd in september 2014 1 the 2014 report. The document, preventing the artificial avoidance of permanent establishment status the action 7 report or final report, provided changes to the permanent establishment pe definition in article 5 of the oecd model tax convention mtc to prevent the use of the several arrangements that were considered to enable a foreign enterprise to operate in. Beps actions implementation by country action 1 digital services.
Access both online and pdf versions of all ey global tax. University of groningen corporate taxation and beps. Addressing the tax challenges of the digital economy. The report also describes rules and implementation mechanisms to enable efficient collection of valueadded tax vat in the. Oecd beps action plan status update report june dd 1 882017 3. The action 1 report on addressing the tax challenges of the digital economy was finalised at the last meeting of the task force on the digital economy tfde then ratified by the committee of fiscal affairs, issued with other beps reports on 5 october, with. This report was released in a package that included final reports on all 15 beps actions. New zealands beps work programme has largely been driven by a wider momentum that has developed since 2012, when the oecdg20 began work on their beps action plan. The final report on action 7 refers to persons that habitually conclude contracts or habitually plays the principal role leading to the conclusion of contracts that are routinely concluded without material modification by the enterprise. Lays out the legal and technical difficulties the beps project faces in its mission to create a multilateral tax framework. The oecd has addressed this challenge in its extensive action 1 final report as part of its beps project.
Business principles for addressing the tax challenges of. Action 1 under its action plan on base erosion and profit shifting beps. Kandev l ast december we discussed from a canadian perspective the final reports1 issued by the oecd on the 15 action items in its base erosion and profitshifting project. The questionable legitimacy of the oecdg20 beps project. Base erosion and profit shifting oecd project wikipedia. Addressing the tax challenges of the digital economy, action 1 2015 final report oecdg20 base erosion and profit shifting project addressing base erosion and profit shifting is a key priority of governments around the globe. Action point status of action point in the pipeline 1 digital economy no specific action taken yet na 2 hybrids no specific action taken yet na 3 cfcs there is no cfc legislation in algeria na 4 na interestdeductions no specific action taken yet. Highlights and next steps 15 october, 10 am, edt antiabuse measures under beps actions 3, 5, 6 and 12 19 november, 10 am, est detailed discussion the final report begins with a. The report notes, however, that certain business models and key features of the digital economy may exacerbate beps risks, and shows the expected impact of measures developed across the beps project on these risks. Action 1 addressing the tax challenges of the digital economy the final report on action 1, addressing the tax challenges of the digital economy, largely follows the initial action 1 deliverable on the digital economy released by the oecd in september 20141 the 2014 report. Final report does not recommend extension of the pe concept see above point 14. Below is an overview of each of the beps final reports. Beps 2015 final reports final beps package for reform of the international tax system to tackle tax avoidance.
In 20, oecd and g20 countries, working together on an equal footing. Action final report oecd implementation guidance uk. Action 1 addresses the tax challenges of an increasingly digital economy where products and services can be provided through the internet and action 15 recommends the development of a multilateral instrument, a model treaty. The action 1 report on addressing the tax challenges of the digital economy was finalised at the last meeting of the task force on the digital economy tfde then ratified by the committee of fiscal affairs, issued with other beps reports on 5 october, with approval by the g20 finance ministers on 8 october in lima. Oecdg20 base erosion and profit shifting project oecd ilibrary. The report notes, however, that certain business models and key. In february 2019, the luxembourg tax authority issued an administrative circular explaining how the new domestic pe provision applies. The 2014 beps package addresses the perceived abuse of tax treaties in a report on preventing the granting of treaty benefits in inappropriate circumstances the treaty report. Address the tax challenges of the digital economy the digital economy is the result of a transformative process brought by information.
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